Higher petrol prices on the way

Motorists were today warned to expect another penny on petrol prices over the next month as fuel companies pass on the impact of sky-high oil costs.

Ray Holloway of the Petrol Retailers Association said petrol had already risen by around 2p a litre over the last 10 days to an average of 81.7p per litre.

This will probably move higher in August as oil prices, which earlier peaked at almost 45 US dollars a barrel in New York, feed through to the pumps.

Mr Holloway said motorists should expect a gradual increase of around a penny over the month of August, while diesel could move 2p to 3p higher.

He added: "I think there will be modest increases in the petrol price in the weeks ahead."

The AA today also repeated its belief that petrol prices will stay above 80p a litre for the foreseeable future, although a spokesman said it was hard to predict how high prices would go.

Edmund King, executive director of the RAC Foundation, said he believed prices would rise further, adding: "Certainly for the next two months or so I think we could well see gradual increases, a penny here and a penny there."

A string of rallies have pushed the cost of oil to new heights in the past 10 days.

Fears of terrorist attacks, disruptions to Iraqi crude exports, and financial troubles at Russia's largest oil producer, Yukos, have all fuelled soaring prices.

Today the cost of crude surged further from last night's record to reach 44.99 US dollars before settling back to around 44.70 US dollars.

Analysts said this was triggered by an uprising which forced the closure of southern oil fields in Iraq and added to existing concerns over tight oil supplies.

Richard Slape, oil analyst at stockbroker Seymour Pierce, said: "The situation in Iraq seems to be more volatile than ever."

He said it seemed "more and more likely" that oil would hit 50 dollars a barrel.

Just yesterday airline passengers became the latest casualties of oil prices when both British Airways and Virgin Atlantic more than doubled long-haul fuel surcharges.

BA and Virgin's fuel surcharge on a single long-haul flight will rise from £2.50 to £6 tomorrow with the charge for a return trip up to £12.

Middle Eastern oil cartel Opec said last week that it may decide at its next meeting in September to increase its crude oil output by an additional 1.5 million barrels a day.